Wednesday, February 18, 2015

Bond Market Pain

Haven't seen a move like that in the bonds in quite a while.  Up 50 bps in less than 3 weeks in the 10 year yield.  It is a massive reversal of the rampant buying that we saw in January, and looks like a preemptive strike on fears of a possible summer Fed rate hike.  It cerrtaintly isn't Bunds driving this move lower in Treasuries, as we have seen Bunds stay around 0.3 to 0.4% 10 yr yields so far in February.

I bought the dip in Treasuries when the 10 year was trading 2.14% yield.  We are right around those levels right now.  After such a big move, and with strong support in the 2.15 to 2.20% area, I decided to bottom fish.  This is not a long term trade, and I have a short leash on it.  Looking for a move higher into the end of the month, with a move perhaps back down to 2.04%, the gap that we left behind on Friday.  Looking for a bounce starting today, but not expecting a big move higher in Treasuries.  Just a bounce.  No need to be ambitious here, as now the intermediate trend is down for bonds, with a March Fed meeting looming, where "patient" will likely be taken out, which I am sure bond investors are loathe to be long into.

Stocks are stuck in a small range here, and the Greece news of a deal didn't give much of a boost, because we already went up ahead of it.  Anyway, it looks like the all clear signal with Greece out of the way and should be risk on into early March for equities worldwide.

No comments: